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Can A Robot Be A Better Debt Collector Than Us?


The drive for greater technological advancements is arguably more apparent than it has been at any other point in history. Some might argue that it is all relative and technological advancements have been an inextricable part of the human race for as long as we have existed. But today, technology is not just an obsession for experts in their field or genius’, it is being embraced by everyone, everywhere.


A recent article suggested that the ‘gig economy’, consisting of apps such as Uber and Airbnb employs no fewer than 1 in 10 working adults in the UK. That is approximately 4.7 million people. These apps are based on algorithms, which will influence a user’s whole experience of using the app, whether as a driver/host or rider/guest. Whilst there can be found some criticisms, the above article notes that the amount of people earning an income from these apps has doubled in recent years.


In an article more closely related to the work that we do, the BBC wrote fairly recently an article questioning the viability of a proposal to outsource court hearing decisions. Some lawyers are not so keen on the idea, which does not come as a surprise but AI is already being used to make important decisions that will go on to significantly impact the life of the people who are subjected to it, such as in the case of credit lending decisions.


But what does all this mean for the debt collection industry? If AI can be used to handle complex legal matters, credit lending decisions and the distribution of work for millions of people then the question is could it also be used to undertake the entire debt collection process? Does it offer transferable benefits to the professionals that operate in the sector and to the consumers and customers of companies employing debt collectors?


Well, let’s look at it from the owner of the debt’s perspective. Taking a wide-angle view on the debt collection climate currently, studies have suggested that more companies are struggling now than this time last year, in terms of unsustainable debts, and cash flow problems and some within the industry believe that it is only due to get worse now that government restrictions on statutory demands and winding up petitions have been lifted. We are seeing higher levels of insolvencies too.


What that tells us is that the current efforts from the debt collection industry to protect people from the risks associated with extending credit to their customers are probably only preventing the situation from being much worse than it already is. However, it cannot be said to be doing a highly effective job of it, given the numbers which we often publish on insolvencies and unsustainable business debts. From that point of view, it is a landscape that could do with a bit of a makeover.

What about from the point of view of the consumer? Is there a case for there being a better experience from the consumers perspective if they had their account managed through AI rather than human beings? To our mind, that is not a straightforward question to answer. The thought that immediately springs to mind is that a human to human interaction would surely offer a better sense of compassion and empathy than an AI-generated communication ever could and that omission would arguably feel more exaggerated over the phone.


One potential upside is that it could eliminate the risk of potentially distressing conversations with debt collection agents for consumers who are sometimes known to go to great lengths to avoid discussing their financial problems with debt collection agents for fear of being overwhelmed and being coerced into agreeing to something that is not realistically achievable for them. An AI-driven service could remove the risk of error by human judgement when assessing a consumers intention to pay.


What about the debt collection agency themselves? Is it possible that their collection rates could see better numbers through the application of AI-based systems as opposed to the classic approach of having telephone-based collectors manually calling each debtor one after the other in the hope of moving each account forward to the next stage of the collection process? For us, we think that depends on what is the key tenets of effective debt collection practice, and we think that regulation should form a part of the conversation too.


What we suspect used to be a role heavily influenced by a person’s ability to be persuasive on the telephone when speaking to people to negotiate payment plans and payment dates for settlement of the account, we think has over the years become an activity which lends itself better to a more consistent approach which is compliant with the regulations under which they take place. Where consistency is required, we believe that AI could excel. However, it is a role which does also require an agile and adaptive approach so it is an argument that does have its limitations.


Of particular importance is with regards to the matter of vulnerable customers. As a company, JSP Credit Management is delighted to see so much emphasis placed upon the consideration of vulnerable customers for the industry. We have published recently some statistics on financial problems and mental health and through charity work done in the mental health sector, we know only too well the kind of suffering which can arise from financial problems on top of existing mental health problems.


The more obvious shortcoming with AI is that it does not feel like a human does, and when in discussion with a customer they disclose something which would give an agent reasons to believe they are vulnerable we cannot see how AI would be able to offer the same emotive response back to the customer that would serve them best in that situation.


However, one thing we are sure of, is we are not even close to the finish line yet. What seems to be cutting edge technology today will be old news in 10 years and we would like to think that at the current rate of innovation that a place could be found for AI so that it occupies a more permanent stake in the debt collection industry for the mutual benefit of all parties involved.


We are still here to do a bit to businesses safeguard their cash flow against late payers or debtors that are refusing to pay, so if you have been struggling to get an invoice paid and would appreciate the support of a team that prides itself on operating in a way that is mindful of the above then visit our website at www.jspcreditmanagement.co.uk or contact us on 01827 66820 to discuss your needs. We operate on a no-win-no-fee basis for bad debt recovery and our credit control and credit risk services can be ordered via our website with the littlest of hassle.

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